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Did the 'Repeal' of Glass-Steagall Have Any Role in the Financial Crisis? Not Guilty; Not Even Close

Peter J. Wallison

American Enterprise Institute (AEI)

November 2009

Networks Financial Institute, Policy Brief 2009-PB-09

Ever since severe turmoil enveloped the financial markets in the fall of 2008, commentators have blamed deregulation of the financial system, and specifically the supposed “repeal” of the Glass-Steagall Act by the Gramm-Leach-Bliley Act of 1999, for the crisis. This has led many to advocate a restoration of the separation of commercial and investment banking that was supposedly the essence of the Glass-Steagall Act. These statements reflect a remarkable degree of ignorance about something that could be easily understood with a small amount of research. In this paper, I will outline the provisions of the Glass-Steagall Act, and show that it did not and could not have had any significant effect in creating or exacerbating the financial crisis.

Number of Pages in PDF File: 17

Keywords: Glass-Steagall Act, Gramm-Leach Bliley Act, Financial Crisis, Financial Regulatory Reform

JEL Classification: G2, G01, G18

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Date posted: November 18, 2009  

Suggested Citation

Wallison, Peter J., Did the 'Repeal' of Glass-Steagall Have Any Role in the Financial Crisis? Not Guilty; Not Even Close (November 2009). Networks Financial Institute, Policy Brief 2009-PB-09. Available at SSRN: https://ssrn.com/abstract=1507803 or http://dx.doi.org/10.2139/ssrn.1507803

Contact Information

Peter J. Wallison (Contact Author)
American Enterprise Institute (AEI) ( email )
1789 Massachusetts Ave, NW
Washington, DC 20036
United States
202-862-5864 (Phone)
202-862-4875 (Fax)
HOME PAGE: http://www.aei.org/scholars/wallison.htm
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